Are Bank Rates Improving or Still Disappointing?

[Greg Bernhardt]

I was looking at bank rates at my credit union and they are still beyond pathetic. Money Market is at .30% and 2yr CD is .65%. Such a waste of time. Inflation rate for March was 2.68% :(

 

[turbo]

I was looking at bank rates at my credit union and they are still beyond pathetic. Money Market is at .30% and 2yr CD is .65%. Such a waste of time. Inflation rate for March was 2.68% :(

It is pathetic. I don't see any improvement in the future until the Fed stops catering to Wall Street and the big banks. Those entities can borrow money so cheaply that there is no incentive to pay us interest on our deposits.

 

[Mech_Engineer]

Why not utilize mutual funds instead? At least for long-term investments they're a good choice, my 401k is up something like 10% for the year to date.

 

[Vanadium 50]

Yes, but you can borrow money at very low rates. I've seen mortgages under 3%.

 

[Greg Bernhardt]

Why not utilize mutual funds instead? At least for long-term investments they're a good choice, my 401k is up something like 10% for the year to date.

Yeah I may have to look into that. Have any "safe" ones to recommend?

Yes, but you can borrow money at very low rates. I've seen mortgages under 3%.

Not in the past 6 months. The avg now is 4.5% for 30yr fixed.

 

[russ_watters]

Yeah I may have to look into that. Have any "safe" ones to recommend?.

Every investment house offers an S&P index fund.

 

[Greg Bernhardt]

Every investment house offers an S&P index fund.

ok, a little riskier and more fun than that :D

anyone think the market is a little toppy? ready for a correction? maybe I wait

 

[jobyts]

ok, a little riskier and more fun than that :D

anyone think the market is a little toppy? ready for a correction? maybe I wait

Buy Chile (ECH), Thailand (THD)/Malasia (EWM) ETFs.

 

[turbo]

Greg, if you contact Principal Group (where my investments are), you can get access to a personal advisor who will be the single contact person for your account. I rolled over several 401K accounts and another IRA into a mutual fund-based IRA. My advisor helped me choose a mix of funds based on my tolerance for risk (pretty high) and expected returns. My wife and I also closed out some savings accounts and rolled them into a money-market account there. Interest rates are crap now, thanks to Greenspan and Bernanke's games at the Fed, but they were pretty good ~5 years ago.

I'm still fairly liquid so that if I see some nice real estate, I can just swoop in and buy it without paying interest to a bank. That way, I can diversify even further, with the hope that the real estate will appreciate faster than the meager interest rates that the banks offer. There are some nice chunks of woodland around here with mature trees. Those could be logged off for an immediate return, then chop up the acreage and sell it off for house lots. Houses are dirt cheap up here, but nice wood-lots are still $$$$$

 

[Geezer]

It is pathetic. I don't see any improvement in the future until the Fed stops catering to Wall Street and the big banks. Those entities can borrow money so cheaply that there is no incentive to pay us interest on our deposits.

I agree. I've been watching CD rates for a while now and even longer-term CDs--three to five years--are yielding low-2% to 2.5% (at most). The last CDs we bought were just under 5%, but that was two or three years ago.

I'd seriously go out and buy $50,000 in CDs if the rates would move closer to 5% again.

 

[Geezer]

Why not utilize mutual funds instead? At least for long-term investments they're a good choice, my 401k is up something like 10% for the year to date.

Sometimes you want cash on hand.

Personally, we'd like to buy a house soon, so we want the cash for that 20% down payment to readily available and invested in something not too volatile.

 

[Geezer]

Every investment house offers an S&P index fund.

You can even buy index funds through ShareBuilder or ING Direct.

 

[Geezer]

Interest rates are crap now, thanks to Greenspan and Bernanke's games at the Fed, but they were pretty good ~5 years ago.

Ahh, the good ol' days...

Yeah, we earn as much interest on our savings today as we did five years ago, even though we have significantly more money now than we did way back when. Sad, but true.

 

[turbo]

I agree. I've been watching CD rates for a while now and even longer-term CDs--three to five years--are yielding low-2% to 2.5% (at most). The last CDs we bought were just under 5%, but that was two or three years ago.

I'd seriously go out and buy $50,000 in CDs if the rates would move closer to 5% again.

I hear you. I wouldn't mind locking up money in long-term CDs if the banks actually paid any interest on them. As long as the Fed is shoveling out "free" money, it will never happen. Thanks to Greenspan, Bernanke, et al, people who actually planned and saved money are watching their cash languish while the banks and investment firms rake it in.

 

[Mech_Engineer]

Yeah I may have to look into that. Have any "safe" ones to recommend?

There have been several other replies, but I'll still put in my 2c.

For mutual funds, I've found going with someone like Fidelity (who my Roth 401k is through) is nice because they have choices for most everyone (high-risk exploratory funds, low-risk bonds, international funds, domestic funds, etc. etc.) Also, there are financial advisors available as well as plenty of research online. As a general rule, mutual funds are a pretty good tradeoff between risk and reward, as long as you're willing to ride out the average of slumps and peaks.

EDIT: They even have "combined retirement funds" which depending on your goal retirement date diversifies your money into several funds, and slowly transition from more risk when you're young and can ride out the slumps, to conservative bonds when you're near retirement. These would be for people who want Fiedlity to do all the management for them.

Fidelity specifically has several research tools that help you decide how much risk you're willing to accept, what your goal is for the investment, and how much you want to get in the end. I think it's realistic to get about 10% growth per year with minimal research and some looking at 2, 5, and 10 year plots of the funds.

Mutual funds are less "liquid" than CD's, but they make a lot more money too. Dave Ramsey has some good views on investing and "financial peace." You might look into taking one of his "Financial Peace University" courses, they're worth their weight in gold IMO.

 

[GW:2]

I agree. I've been watching CD rates for a while now and even longer-term CDs--three to five years--are yielding low-2% to 2.5% (at most). The last CDs we bought were just under 5%, but that was two or three years ago.

I'd seriously go out and buy $50,000 in CDs if the rates would move closer to 5% again.

I hear you. I wouldn't mind locking up money in long-term CDs if the banks actually paid any interest on them. As long as the Fed is shoveling out "free" money, it will never happen. Thanks to Greenspan, Bernanke, et al, people who actually planned and saved money are watching their cash languish while the banks and investment firms rake it in.

Chase had a 5% five-year CD rate a couple of years ago... now the rate is less than half that.

Interest rates are down and they may stay down for awhile... but it can't last forever.

Once inflation takes off [which it is beginning to do this year] the Fed will not be able to hold down rates.




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[khemist]

The market is waiting for a correction, but there isn't bad enough news to start it. Volume is very light on up days and expands on down days. Only time will tell, however.